Arthur J. Villasanta – Fourth Estate Contributor
Raleigh, NC, United States (4E) – IBM said it will acquire American software firm Red Hat, Inc for more than $34 billion.
IBM and Red Hat said the deal will enable businesses to do even more work in the cloud, keeping their apps and data portable and secure no matter which cloud or hybrid technologies they adopt.
The Cloud is one of IBM’s four key strategic imperatives. To add bite to its bark, IBM announced cloud deals with Economical Insurance, ExxonMobil and Novis. IBM has been working to catch up to Amazon and Microsoft in the cloud infrastructure business.
Following the acquisition, Red hat will become a unit of IBM’s Hybrid Cloud division. Red Hat CEO Jim Whitehurst will join IBM’s senior management team and reporting to CEO Ginni Rometty.
The company earned $259 million on revenue of $2.92 billion in its last fiscal year, which ended Feb. 28. Its revenue grew 21% between the 2017 and 2018 fiscal years.
IBM will pay cash to buy all shares in Red Hat at $190 each. Shares in Red Hat closed at $116.68 on Oct. 26 before the deal was announced.
This acquisition will be the largest in IBM’s history. It will also be the third-biggest in the history of the U.S. tech industry.
A distributor of open-source software products and technologies to the enterprise community, Red Hat’s market capitalization comes to $20.5 billion. The firm is better known for its open source ed Hat Enterprise Linux. It also develops, maintains, and contributes to many free software projects.
Red Hat began operations in 1993 as a distributor of Linux, an open-source operating system commonly used in server computers that power data centers. Today, however, Red Hat is known for distributing and supporting Red Hat Enterprise Linux, and other technologies commonly used in data centers.
Rometty said the deal shouldn’t be seen as part of any plan for her to transition out of her position as CEO at IBM. “I’m still young and I’m not going anywhere,” she quipped.
Both Rometty and Whitehurst agreed that Microsoft’s purchase of GitHub was “irrelevant” to IBM and Red Hat’s decision to enter into a deal.
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